Christoph Eisenring expects the government formation process in Berlin to be slow moving, yet he can also make out a few common themes that could potentially help establish a coalition between the CDU/CSU, the Greens and the FDP.
Forming a government will be tough. The Social Democrats are going into the opposition. From a purely mathematical perspective, that means there’s only one version possible: Jamaica. In other words a coalition between the CDU/CSU, the FDP and the Greens. One indication that a coalition of this nature might not be feasible is the Bavarian CSU’s demand for limits on the number of refugees taken which stands in contrast to the Greens’ advocacy of a generous family reunification policy. And while the FDP calls for a climate policy that is market oriented, the Greens demand that no new cars with combustion engines be licensed from 2030 onward. However the obstacles probably aren’t insurmountable: Christian Lindner, the leader of the FDP, and Cem Özdemir, the Greens’ top candidate, have a good relationship plus the Greens’ strengthened group of leaders is from the “Realo” wing. In the end, they’re just going to have to get it together. Particularly risky is the Bavarian CSU. Their willingness to make compromises could drop significantly following their enormous losses. Four years ago, the coalition agreement was only concluded on 16 December. It’s not likely to happen appreciably faster this year, either.
There are definitely some issues that could link the parties in a potential Jamaica coalition. Everybody is talking about digitalization but what they really mean, first and foremost, is the expansion of fiber-optic network coverage. If there were a “Ministry of Digitalization”, that might simplify dealings with the authorities quite a bit. Some progress is conceivable in the area of research funding since that’s something all three factions want. Only minor relief can be expected in terms of taxes. On the topic of energy policy, German SMEs are suffering from the hefty cost of electricity with prices twice as high as in France. In a new government, the FDP should at least be able to put a stop to the cost increases stemming from all of the cost allocations.
Switzerland is interested in stability. If Chancellor Merkel succeeds in forming a governing majority, Germany will remain an anchor of stability in the eurozone. Plus ever since Switzerland brought itself to approve the automatic exchange of information with the EU, Germany’s Federal Minister of Finance, Wolfgang Schäuble, has been a big proponent of Switzerland. It would be beneficial for Bern if he stayed in the government. The euro-franc exchange rate hardly moved at all on the Monday after the election, which also points to stable relations.
The Swiss Embassy in Berlin is celebrating its 150th anniversary and our bilateral relations are good. Swiss companies employ 380,000 people in Germany and 300,000 Germans live in Switzerland. The cultures are similar. The level of legal certainty is high. Like Switzerland, Germany has a dual education system and that is one reason why the country is an obvious option when looking for a production site. In surveys, however, companies respond that the shortage of skilled labor is their biggest problem, even ahead of the burden of bureaucracy. The unemployment rate has been cut in half over the last ten years and wages are rising faster than the EU average. One of the risks I see is Germany’s energy policy: Renewable energy capacities are on the rise and squeezing into neighboring markets at peak hours. Subsidized German energy is upsetting the electricity markets of its neighboring countries as well.
You can find more background information from Christoph Eisenring and other NZZ correspondents in the new NZZ Global Risk newsletter.
© 2019 KPMG Holding AG is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.